Story of a Life Insurance Advisor

I received a comment on one of the Insurance related articles from an Insurance Advisor based out of Delhi. When I was just planning to add my reply – there was one more comment/query from one of the readers (you can consider a message from Indian Public). Both prospective were totally different but they had one thing in common both were in deep pain. So let’s hear their stories and try to reach some conclusion.

Pain of Insurance Advisor

Great writing Hemant but still not fully convinced… (He was reading this Article – Why ULIP got banned). I being an insurance advisor can tell you from my experience in this line, for last 4 years now that whenever I am sitting with my prospective client/existing client, the first thing THEY DON’T WANT is TERM PLAN.. To them, this type of insurance concept is FOOLISH howsoever hard I may try… (This I think is also a main factor why an average Indian is under-insured)… (Must Read – Psychology of an Indian When it comes to Life Insurance)

Public at large wants to invest in PLANs which give them good return at maturity (That too in short-term period of 3 to 5 years)… Nobody himself/herself is ready to look into distant future… (The reason why most of them end up their hands burnt, bcoz they check their fund value after 2 or 3 years, found it to be less than even the premium paid – resulting because of upfront charges in the initial years).. If given advice to stay put for long period, they are greatly reluctant..

On top of it, day in and day out we have to hear that agents are making a killing…Now tell me, does anyone give it a thought that how hard it is to procure even a single policy?? I meet on an average 100 people in a month, only 17-18 are convinced to proceed further, and finally 4-5 are converted into final policies/cases… and for these 4-5 cases, I am on the phone for practically half a day every day of the month (Working majorly on Saturdays-Sundays-Public holidays), travelling from one part of Delhi to other (Everywhere in NCR) by my car/bike or metro.. Giving them/sending those presentations/illustrations over mail or hard copies and in return I get 10% to 20% COMMISSION upfront and not more than 3% on renewals… And in lieu of this, client treats me like a slave (Bhai saab, POLICY nahi aayi?? – mere phone number galat chhapa hai); mere premium jama kara ke aaj hi raseed de do kyunki apne accounts department mein deni hai… After a year, calling me over to pick-deposit-return renewal premium receipt and also from time to time, asking me to check his portfolio of other companies (I am an agent for LIC and KOTAK) so giving them opinion, fund value etc for BAJAJ, ICICI etc.. So you think am I making a loot???

The only thing I want to further is please make differentiation between an AGENT and a FINANCIAL ADVISOR.. Please check if your friendly neighborhood agent is a PART-TIMER or otherwise?? Is he working for quite some time or just started out and always bring some SALES MANAGER with him to clear doubts or explain the product?? Or trying to pick the case from the client only by passing on 30% of the commission or paying first monthly installment of the policy?? If he is doing so, he is an AGENT, don’t deal with him, avoid him… But the first thing he advice is TERM PLAN, working full-time for last 3-4 years, has a good client base, then he is a FINANCIAL ADVISOR, trust him – try to grasp as much from his knowledge – and proceed further..

One more point I want to add is, if Mr X wants to take a TERM PLAN for SUM ASSURED of Rs 25 lakhs for 30 years and company Z says that premium will be Rs 8,500… and Mr X is happy and willing to pay this much, how does it affect him if the agent is earning 20% out of those Rs 8,500..I believe policyholder will be effect if company says that over and above this Rs 8,500, he is required to pay Rs 1000 additionally as agent’s commission that should be worrisome and note otherwise..

Please note that a FINANCIAL ADVISOR of an insurance company is working as hard as anybody but it’s just that his income looks like FLEECE to everybody… Please don’t blame the entire FINANCIAL ADVISOR community for mis-selling or mis-deeds of few AGENTS…

So we have heard story of Insurance Advisor now read the query and comment of 1 reader who is representing Indian public. (He was reading Bankers are biggest Mis-sellers)

Pain of Indian Public

Recently an LIC agent approached me and told me that LIC has launched a new “attractive” plan called Retire and Enjoy. Even though I will never buy those idiotic products, I made a search in the net about this one. LIC’s website didn’t even have a mention for that. But agents from all over India had advertised about this. Then I came to know that this is a clever product made by agents by combining many LIC policies. The catch here is that since there are many policies and each are starting on consecutive years, they promise a good commission to the agents, unlike the direct plans which are not attractive after the initial one or two years. A plan just made for the agents and a really big loss for the customer. My Questions are: 1. Even though this is an agents created one, how come an all India spread has occurred.(Read LIC Wealth Plus) Without a clever central planner and executor, this is not possible. Who is behind this? 2. Does LIC has any roles in this?

Views from my Side : This case is like “No one killed Jessica” I will not add any conclusion or decision as I have already written a lot on it.

I think let readers decide what’s wrong & what’s right – end of the day it’s their financial life.Must share your views.

Insurance Advisor in this post is Mr Dhawal Sharma from New Delhi.

Reader who is representing Indian Public is Mr Shinoj Jose from Bangalore.

Note: This is a story from one of your fellow readers. Please be nice. It is not easy to put your story out in public. Unduly wicked comments will be removed or edited. If you wish to share your story about money – feel free to mail me at [email protected]

Hemant Beniwal is a CERTIFIED FINANCIAL PLANNER and his Company Ark Primary Advisors Pvt Ltd is registered as an Investment Adviser with SEBI. Hemant is also a member of the Financial Planning Association, U.S.A and registered as a life planner with Kinder Institute of Life Planning, U.S.A.
He started his Financial Planning Practice & TFL Guide Blog in 2009. "The Financial Literates" is a dream & mission to make Indians Financial Literate.

47 COMMENTS

You bet the advisor is correct, I am not a FA, however people in office come to me and ask me about Financial products/Insurance and so on and when i tell them about term, their reaction is “marne ka baad mujhe thodi na milega” I needs something that gives me a good return with insurance. How much you explain them, they still don’t understand.

On the other hand i have seen FA talking and fooling people left and right, i know someone who invest in ULIP every 3 years, only cause the agent returns the entire commission to the investor, how stupid. there are so many agents who just fool around and give you wrong information.

We believe that insurance companies are covertly supporting mis-selling. These are just some of the stories we have done on this Insurance through SMS, a Sick Marketing Strategy Legitimate agent runs MLM scheme under a murky cover Pyramid schemes run riot under insurance regulator’s nose Reliance insurance agent involved in chain-marketing scheme

We have given a chance to insurance companies to reply. They hem and haw. They don’t give us clear answers in writing. IRDA is fast asleep. Investors beware.

@Hemant/Vikrant – add to this, i know quite a lot of people who have purchased a certain plan because the telecallar told them that this product being introduced in DIWALI season is for limited period and if you invest upward of Rs 35,000 or Rs 40,000 you will get one GOLD coin/JUICER/SHIRT etc..How ridiculuous is this reason to take up a policy?? and then they say that agents/companies are at large, doing misseling all the time??..

If only public too open up its eyes, the world will be a better place (At least financially)..

I think if investors can do a check in the internet on what they are parking their money, most of the issues will be solved. Because agents are ready to go to any extent to get business. It’s the precaution of the investor that matters. Also if we ask more details to them, they will transfer the call to someone else. This clearly indicates that the first caller does not know anything except to repeat “Sir we have an attractive plan for you from … “. Just one more update: Yesterday I received call from SBI’s agent regarding pension plan which guarantees 13 percent returns. There was no mention to this in the net. Just like that the agent is telling… Regards, Shinoj

Dear Dhawal, telecallers are not independent entities. Big companies will use telemarketers for running their business. As a way, i feel they are agents only, working for their employers. If they know what they are telling, they are doing unethical work. But of course, these days no body matters ethics.

@Shinoj – Agreed telecallers are not independent units but then they are not the final authority unto them as well..Telecallers are just props, educated/trained in such a way to entice the listner that he gives his consent and to take his consent, the listner wants to listen only THE GOOD THINGs..

I am not at all justifying telecallers…just want to say that next step after telecalling should be meeting with a knowledgeable sales person with the product broucher in hand..

..and after the meeting, the prospect find the product good enough and everything told to him by telecaller in the product broucher, a perfect sales take place – and in this case, TELECALLER is a boon – both the client as well as the company..

Again, my humble request to everybody is to be IN ALERT MODE after telecaller step and spend few more minutes on the product and it would be WIN-WIN situation for all..

What Dhawal mentioned in the comment is called “mis-buying” , people have so much greed that they go beyond the height of stupidity . Some readers on my blog want to do CFP so that they can save Planners money , Some readers want to become an MF agent or make his wife become the agent so that commissions will be “Ghar ka paisa ghar me” .. Unless public get their eyes off the small , futile things , they will never get over the financial mess , Just like people have bad “character” in life , its bad “money Character” ! . We at jagoinvestor call it as “having a bad relationship with money” . These kind of people do not have a bad financial life , its reverse , bad financial life has this kind of people .

Btw, I could sense that it was dhawal’;s comment before I saw this name at the bottom , because we had long coversation over phone on this point many weeks back where he said exactly same story to me , The agent commissions is exaggerated in India and after this ULIP commission has come down to 5% , I am sure the situation will ease a bit

I fully agree with Mr. Dhawal Sharma. Investors or rather I should say short term traders are equally responsible for all this “bad ULIP” era. Not all ULIP’s are bad. There were many ULIP’s which were given good IRR, infact more than new plan’s IRR, but customers want good returns in short span of time. They check fund value just after months of purchasing ULIP. At the time of signing application form, they behave like long term investor, but after 3 years, they become genius in finance and just stop their premium. Then, they blame advsior for mis-selling. They are graduates, MBA, PhD, good businessman but can not understand simple english and maths.

Yes, I agree some ULIP were / are not good for investors. But who made them and approved them. It’s company and IRDA. Do we have a single person who complained in Ministry of Finance or court for making such bad plans. No. Because it’s easy for them to blame advsior.

The summary is investor should make cordial relationship with advisors and trust them.

@GOPAL – Thanks, at least someone is out there who understands the POWER OF COMPOUNDING and LONG-TERM GROWTH..

Show me one investor who has invested in ULIP for last at least 6-7 years in equity fund of his INSURANCE COMPANY, and i can say for sure that he is in profits..

As you rightly said, everybody wanted a MAGIC WAND and not ULIP, which will give them 100% profit, that too within 2 to 3 years with INSURANCE, without any CHARGES…he he he, not possible in practical/actual world 😉

There are a lot of educated people who are being fooled only because they don’t want to read the things but just want anyone to come and explain it to them. Now this is where the agents play their game….they simply tell what is required to sell the policy and not the odds of it.

Moreover, there is need to check the actual terms n conditions. the * sign of course is always there.

i am an agent of LIC of india. I am selling term plan from 2005 itself. after taking so much pain and lot of efforts to complete a term plan i am seeing that even though the people are well educated they loose interest in paying premium. they feel i am losing around 2 lakhs as premium. I explained each and everybody that in any policy the mortality charges will be included.

Hi all, I want to comment on “retire and enjoy”-the so called mixed product of LIC. The thing is that it is not a core product of LIC. Based on the individual characteristics of few plans and taking risk and reward propositions duly into consideration, the same has been designed and presented. It is not a faulty nor idiotic presentation. It is a customization. That’s it. Actually you will find a mixture of 1 or 2 plans split into volumes depending upon the requirement of the client. This task is actually a laborious one both for the advisor and LIC. Inspite of this, I hope it would yield good result for the extra effort put in by the advisor. Please trust me, nobody or no master mind behind this. Any prudent advisor or even a prospect can indulge in such a jugglery but within the frame work of insurable interest.

As above Mr Dhawal explained his story. I too would like to make a comment here. That there is a lot of difference between Agent & Advisor. I think if one gives incentive on first premium of Policy means He is an Agent and if not He is an Advisor. No one can expect service or good advice from an agent where it is possible to expect from an Advisor. End of the day it is the discretion of the person whom to elect for our financial advice.

Hi Hemant, I had a query regarding purchasing online Term Insurance Plan. I hometown is lucknow but I am presently working in some other city and My Job is transferreble also. I intend to buy online term plan of HDFC through some agent or HDFC Life Relation ship manager. though I have not finilised yet. Should I purchase it from my present city where I am working or should I take it from my hometwon only. Does it make any difference from which city Plan is purchased if I purchase directly or through any Agent/Relationship Manager. Is it possible to transfer the policy to other city once policy is issued. It is possible in case of LIC, But I am not sure about other companies. I have a term insurance from Max new york , I am planning tu buy one Online Term Plan and One Amulya Jeevan though one of my friend who is employee of LIC.

dear bani, it is misfortune of indians that qualification to become insurance advisor (so Called) is 10 th pass how one can plane for some ones life who is just 10 pass finance is very complicate subject since last few year sebi making stringent law for MF distributor but what irda doing there is lot of miss selling in insurance but due to strong lobby of agents irda is unable do any thing there is a strong mistake of insurance buyer instead of asking benifits of policy he start with what rebate or commission agent will give his intrest is in commision not in benifit, another perseption investment in insurance insurance is not investment but safety thanks bani to provide good knowledge to people

Am an nri. Wife has business in India. To get deduction under 80C I need to take up some life insurance plan in her name. She wants to pay an annual premium of INR 100,00/- . We want to take up a policy for 5 years maturity say 5 to 10 years. Will you please advise which insurance plan and of which company will she take.

dear sir, how you mange all your time with articles, business, web page reply on messege board etc ps tell how you do allthis how much time u devote for all this if u ps give chart of time u allot thanking you manoj

Hi, I just want a suggestion from you on my problem: I am working as Financial Advisor in a reputed co. for the last four years. But, now I want to change my Unit Manager due to my personal reasons. Is it possible as my code was generated under him. Please reply me as earliest as possible.

I think the whole life insurance plan is much better than term plan. In whole life insurance the insurance cover will increase every year and good amount is given after death to the nominee. If the person survive at the age of 80 years the he can take the maturity amount which is indeed is very high.

Hi nalini compare the term plan and ppf of same tenure itz the best strategy.on one hand u can cover ur life with such a small amt every year on the other hand invest the difference in ppf and see the maturity amt on excel sheet.

sir i just started my part time career with LIC as an insurance advisor. I don’t want people to take just policy but i also want to help them as much as possible .. i am not from a financial background but recently i started to like economics and finance(just for knowledge) very much.Thanks for your articles ,i am currently pursing my b.tech(5th sem,mechanical), is there are more specific articles ,which would help me to become a better financial advisor.

it has been a long journey with tfl. every saturday night when e-mail reaches my inbox, i become impatient to read it until the sunday morning. since i m a doctor, the world of finance is a whole new thing for me. of late, it has opened my eyes. immediately i subscribed to fundsketch goal based planning 4m tfl. now i m feeling happy that at least now i m in the right path. thanks for doing this wonderful job for the people of my motherland. what to say more that guy from the remotest place of odisha like me are subscribing to arkfp for better financial health. the scenario is definitely changing.